Trump Signals Willingness to Tweak, Not Replace, NAFTA

The Trump administration proposes relatively minor adjustments to the North American Free Trade Agreement, a pact President Donald Trump described during his campaign as a “disaster.”

Trump had threatened to quit NAFTA and impose hefty import taxes on goods from Mexico. But The Wall Street Journal says a draft plan being shown to Congress would keep many elements of the existing 23-year-old NAFTA agreement.

The proposal would allow Canada, Mexico or the U.S. to impose tariffs to stem a surge in imports from another member of the pact that poses a real or perceived threat to domestic industries. Provisions for those “snap-back” tariffs already exist in the NAFTA agreement. The difference is that countries would be required to resolve differences between themselves rather than before an international court.

Another difference: The Trump plan would eliminate a term in the current NAFTA agreement that requires each government to consider bids from the other two countries on domestic infrastructure projects. The stipulation would enable the White House to promote its “America first” approach to contracts.

The draft also demands “swift action” to reduce the trade deficits between the U.S. and the other NAFTA countries. The proposal suggests that rules of origin, which dictate the domestic content required for locally produced goods to avoid import taxes within the NAFTA region, could be modified. The plan doesn't offer details.

The Journal says the proposal includes several elements found in the Trans-Pacific Partnership, a pact that Trump vehemently opposed during his campaign. He pulled the U.S. out of that pending deal during his first day in office.

The suggested draft NAFTA revisions include TPP-like sections about digital commerce, the protection of intellectual property, labor, environmental issues and the business operations of state-owned companies, according to the newspaper.